FCA assesses contactless card fraud risk
Written by Anthony Strzalek
The chairman of the Financial Conduct Authority (FCA) has written to the treasury select committee, outlining the extent of contactless card fraud in the UK and the options available to tackle it.
John Griffith-Jones, who is chairman of the Payment Systems Regulator as well as the FCA, wrote to Andrew Tyrie MP, chairman of the treasury committee, to outline proposals at combating such fraud.
The use of contactless cards is increasing with 101.8 million cards in issue in the UK and the average contactless transaction currently sitting at £8.95, according to data from the UK Cards Association.
Additional figures from Financial Fraud Action show that, in 2015, £7.75 billion was spent using contactless cards or devices, generating £2.8 million of reported fraud losses. Over this period, contactless card fraud accounted for 0.5 per cent of total card fraud.
In his letter, Griffith-Jones, said: “Whilst this suggests the risk to consumers is relatively low, we agree public confidence could be eroded without further action.
“The key risk to customers occurs from merchants who process ‘offline’. (i.e. retailers who store payments in a batch and process them later). Around 45 per cent of contactless card transactions occur offline.”
Griffith-Jones outlined a number of options available to address the issues around contactless card fraud including, removing any onus on customers to identify fraudulent transactions and raising awareness of the Industry Hot Card File, which contains information on over 7.2 million UK cards which have been reported lost, stolen or compromised.
Andrew Tyrie MP, in response to the letter, said: “As things stand, in order to mitigate the risk of fraud, customers are expected to comb through their bank statements months after they have instructed their banks to block their lost or stolen cards. That seems unreasonable. The treasury committee has urged the FCA to sort this out.
“So the package of measures to resolve this problem, which the FCA proposes in their letter to the committee, is welcome. One of the FCA's operational objectives is to “secure an appropriate degree of protection for consumers”. The committee will do what it can to hold the FCA to it.”